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PACT Recommendation: Allocate level state funding for fiscal year 2022 to comprehensive tobacco prevention and control programs ($13.754 million).

 

Funding tobacco prevention and cessation is critical during the COVID-19 pandemic.

Maintaining tobacco prevention and cessation funding is critical to preventing death and disease as well as reducing healthcare costs, and it is particularly essential during the COVID-19 pandemic. The Centers for Disease Control and Prevention (CDC) has identified smokers as a group of people who may be at an increased risk for severe illness if they contract the disease.

While more research is needed, a recent study published by the New England Journal of Medicine found people who smoke were more than twice as likely to have severe symptoms from COVID-19 compared to those who did not smoke.

Tobacco prevention and cessation programs are a smart investment for states that want to save lives and save money by reducing tobacco-related healthcare costs. Tobacco use kills more than 22,000 adults in Pennsylvania every year and costs taxpayers $14 billion annually. For every dollar spent on tobacco prevention, states reduce tobacco-related healthcare expenditures and hospitalizations by up to $55.

Funding for Cessation and Prevention Programs: Master Settlement Agreement (MSA) with the Tobacco Industry

In 1998, Pennsylvania and 45 other states entered into a Master Settlement Agreem
ent with the
tobacco industry. The Master Settlement Agreement was estimated at a minimum of
$206 billion dollars
nationwide
;
Pennsylvania was allotted an estimated $11 billion dollars to be disbur
sed in the first 25
years of the agreement

In 1998, Pennsylvania and 45 other states entered into a Master Settlement Agreement (MSA) with the tobacco industry. The Master Settlement Agreement was estimated at a minimum of $206 billion dollars nationwide; Pennsylvania was allotted an estimated $11 billion dollars to be disbursed in the first 25 years of the agreement.[i] In 2001, Pennsylvania created Act 77 which established the Tobacco Settlement Fund (where all MSA funds are placed once received). It also established related programs that are supported by the fund. However, the agreement does not contain any language requiring states to allocate money to tobacco prevention & cessation so many states, including PA, have used MSA funds for other purposes. Since 2001, our funding has been eroded. Without the necessary dollars from this Master Settlement Agreement, the necessary prevention and cessation programs needed to help Pennsylvanians stay tobacco-free wouldn’t exist.

Tobacco Cessation Funding

Currently, less than 5% of Tobacco Settlement dollars are allocated to tobacco use prevention and cessation ($13,754,000). 

Master Settlement Agreement Resources

Funding Timeline

Year Funding Change
2001 PA passed legislation (ACT 77), allocating 12% of the MSA budget to tobacco cessation and prevention. In the intervening years, that budget has taken several hits as described in these tabs. Tobacco prevention and cessation is now down to less than 5% of the MSA budget.
2005 3% of Tobacco Prevention and Cessation funds used to patch up holes in the state budget.
2010 Tobacco cessation and prevention fund decreased by 45%, forcing the elimination of the majority of tobacco cessation and prevention programs that target youth and the community.
2013 An MSA-related arbitration panel ruled against PA in a non-participating manufacturer adjustment dispute, reducing the 2014 payment by $169.9 million.
2015 The tobacco cessation and prevention fund remains decreased by a 45% funding cut. The PA Department of Health estimates that $14.2 million will be allocated for tobacco control and prevention programming. This is only 10% of the CDC’s recommended spending level of $140 million.
2017 The Pennsylvania legislature floated a bond using MSA funds to balance the state budget. MSA funds no longer support tobacco cessation and prevention programs in Pennsylvania; without a dedicated funding stream, future program funding may be vulnerable to budget cuts.
2019 PA passed legislation (Act 20) requiring revenues from the MSA to be used to pay the debt service on bonds issued. A provision was included that required funds equal to the debt service payment to be transferred from cigarette tax revenues to the Tobacco Settlement fund. This provision must be reauthorized every year, or funding to programs will be reduced or eliminated.

Since 2014, the U.S. Centers for Disease Control & Prevention (CDC) has recommended that Pennsylvania fund its tobacco prevention programs in the amount of $140 million. [ii]

agreement

[i] Pennsylvania Alliance to Control Tobacco (PACT). Tobacco Control Issues: Master Settlement Agreement. Available: https://pactonline.org/tobacco-control-issues/master-settlement-agreement/

[ii] Campaign for Tobacco-Free Kids. Broken Promises to Our Children: A State-by-State Look at the 1998 Tobacco Settlement 22 Years Later. Available at https://www.tobaccofreekids.org/what-we-do/us/statereport